Cryptocurrency is not a novelty anymore. Some people only heard about it, while others trade, buy, sell, and pay with digital money on a daily basis. But how can you use crypto to its full potential?
One of the ways is to find a place where you are going to feel comfortable and prosperous with your virtual assets. A place where you would not have to pay taxes on your crypto or, at least, could pay the lowest possible taxes. Maybe even a country where you can pay with digital coins, cash them out, or use crypto-friendly banks.
Let’s see what countries have those features and why they are considered to be crypto-friendly.
Malta authorities have been working on creating a crypto-friendly environment for several years now. In 2018, Malta set out the Virtual Financial Assets Act (VFA Act) to regulate the blockchain industry and promote its growth. It has even gained the proud name of a blockchain island.
To make the island even more attractive for crypto enthusiasts, the Maltese government enacted the Innovative Technology Arrangements and Services Act (ITAS) and the Malta Digital Innovation Authority Act (MDIA).
Foreign residents of the country do not have to pay income and capital gains tax on crypto. There are also crypto-friendly banks in Malta, such as Paytah, Agribank, and an upcoming Binance-backed Founders Bank.
What’s more, you can become a citizen of the EU by becoming a citizen of Malta through investment. So, if you are a high-net-worth individual and want to stay on this beautiful island for a while, you can invest from €690,000 into the country’s economy and obtain a Maltese passport.
The UAE, and Dubai in particular, is excellent in many ways and also knows how to deal with crypto. Dubai has its own digital assets regulator called VARA (Virtual Assets Regulatory Authority). It is the first independent regulator for virtual assets in the world, helping to keep the market safe and facilitate crypto operations.
Clear and straightforward rules in the emirate made things much easier for the local crypto community. More and more people come to Dubai not only to lower their taxes but also to avoid confusing and obscure regulations on cryptocurrency in other countries.
As a UAE tax resident, you can also cash out crypto in Dubai and the UAE tax-free. Being a tax resident in the emirate can help you reduce taxes down to 0%. There’s no capital gains or income tax. You can also buy property or cars in Dubai with crypto or withdraw it first and pay with fiat money.
Plus, wealthy individuals can easily get a Golden Visa in the UAE through various investment options. Golden Visa allows you to reside and do business in the UAE, have an account in a local bank, and benefit from a favorable tax regime.
This might be rather surprising, but Slovenia is one of the most crypto-friendly countries in Europe. The local government has proved to be supportive of using and developing blockchain technologies in the country.
Ljubljana, the country's capital, has numerous selling points that accept payments in crypto. Ljubljana was also named the most crypto-friendly city in Europe in 2022. It boasts over 1300 crypto-friendly bars and restaurants, sports centers, and shops accepting over 50 cryptocurrencies.
The country has its own crypto payment network called GoCrypto, developed by a Slovenian company and now present in 70 countries worldwide.
There are lots of successful blockchain start-ups in the country and many Bitcoin ATM locations where you can buy or sell crypto.
You can mine cryptocurrency in Slovenia without paying VAT, and you can sell crypto of any kind with a 0% capital gains tax.
Being a small EU country, Estonia is big on crypto. Plus, the IT sector there is huge when taking into account the size of the economy.
Since 2017, cryptocurrency operations in Estonia have become official, and the crypto licenses were first issued. In 2020, the rules for getting a license for companies that deal with cryptocurrencies became more complicated, but this also increased their credibility. If the company gets the license, it means it complies with all the strict rules, and its digital currency operations are completely legal.
A crypto company that retains and reinvests its profits instead of distributing it doesn't pay corporate income tax.
The country’s legislation is crypto-friendly. Estonia even declared its intention to introduce the first national cryptocurrency called Estcoin. There is no VAT on crypto in Estonia. You can also find physical Bitcoin ATMs across the country.
Georgia is not only a place with delicious food, hospitable locals, and amazing nature but also a favorable place for crypto.
Though digital money is not a legal tender in Georgia yet, transactions with crypto as well as owning it is entirely legal. What is more, there are over a hundred crypto ATMs across the country, most of which are located in its capital, Tbilisi.
You can even buy real estate in Georgia with virtual money. Individuals trading crypto in Georgia do not pay an income or capital gains tax. Selling digital currency does not imply any taxes either.
If you exchange crypto for local currency (Lari, GEL) or any other one, you will not pay VAT.
Mining in Georgia is rather profitable since the electricity cost there is relatively low when compared to most Western nations. You also will not need to pay for a license to do it.
Gibraltar is a country in southwestern Europe and a British Overseas Territory where you can speak English or Spanish with locals and also trade crypto. Along with its status as a crypto-friendly country, it is also a tax-friendly country as there are no wealth, gift, inheritance, interest, or capital gains taxes and no VAT.
In 2018, Gibraltar implemented a Distributed Ledger Technology Regulatory Framework. It specified the regulations for companies that deal with DLT and was aimed at creating a more secure crypto environment.
Cryptocurrency investments are not subject to capital gains tax. There is also a crypto-friendly bank in Gibraltar called Xapo.
El Salvador is a diminutive country in Central America that was the first country to introduce Bitcoin as its legal tender in 2021. With a 70% return in 2023, the country’s dollar bond has outperformed most emerging markets thanks to this introduction.
El Salvador has also launched its first local Bitcoin (BTC) mining pool (Lava Pool) within the Volcano Energy project, partnering with Luxor Technology. The $1 billion project, in which Tether and other companies have invested, will use renewable energy to mine Bitcoin.
Another advantage of El Salvador is that foreign crypto investors are exempt from paying taxes on their profits in Bitcoin. There are over 200 BTC ATMs available in the country.
Bermuda picturesque tropical islands in the North Atlantic Ocean are an attractive destination not only for tourists but also for crypto investors.
In 2018, Bermuda passed a law on business related to digital assets. It exempted participants of the crypto community from income and capital gains taxes. There are also no withholding taxes. Overall, the country has a favorable 0% tax jurisdiction.
Cryptocurrency transactions and digital assets in Bermuda are tax-free. From October 2019, USD Coin (USDC) Stablecoins can be used to pay for government services in the country.
There’s also a new licensed crypto-friendly bank called Jewel Bank that provides a whole range of services to digital asset companies and investors.
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